Top 10 hottest real estate markets: San Francisco, San Jose… and Vallejo?

Realtor.com’s new national “Hotness Index” is once again top-heavy with Bay Area markets. No surprise there.

Because of the region’s housing supply (ridiculously low) and demand from buyers (high, like always), the San Francisco-Oakland-Hayward metro area is No. 1 on the January list, and the San Jose-Sunnyvale-Santa Clara metro area is No. 2.

More of a surprise is that the Top 10 includes several not-so-distant metros where Bay Area commuters increasingly have been buying homes at relatively affordable prices.

And yes, your eyes are not deceiving you: Those markets — less than chic, until recently — are among the 10 hottest in the entire country, according to Realtor. com. Its “Hotness Index” identifies where houses are selling most quickly — and which markets are generating the most listing views on realtor.com.

In November, the Mercury News spoke with Jonathan Smoke, realtor.com’s chief economist, who noted some dissonance underlying the index. In other words, while Northern California markets have continued to dominate the index, they are in some ways not nearly as hot as they once were. They are simultaneously “hot” and “cooling,” he said, because the rate of price appreciation has decreased across the Bay Area.

“The actual prices on closed homes are decelerating in relation to the unsustainable prices we’ve seen in the past year or two,” he said. “So the unsustainable places are still hot — but relative to the last couple of years, they’re not as hot as they once were.”

Next week, the Mercury News plans to report on the state of the Bay Area market when CoreLogic, the real estate information service, releases its new analysis of sales and median prices across the nine counties.